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Dec 04

Buying is 42% cheaper than renting in Seattle area

It’s more affordable to buy a home than to rent in the 100 largest metros in the nation. That’s the case if you plan to stay in the home for seven years, which is the average time Americans traditionally live in a home before moving.

The findings come from real estate data provider Trulia, which conducted a study of key market factors impacting the cost of homeownership. Based on asking prices and rents from the summer, the company claims that, on average, buying is 45% cheaper than renting those areas. That’s a savings of $771 a month.

Seattle 

However, how much cheaper it is to buy a home than to rent depends on where you live. In the Seattle area, Trulia numbers indicate it is cheaper to buy than rent by 42% for a savings of $715/month. In Tacoma and Portland it is 41% cheaper to buy versus rent.

Trulia Chief Economist Jeff Kolko cites the faster pace of rent hikes versus those of home prices.

“Asking home prices have started to rebound and have risen by 2.3% year-over-year in August (3.8% excluding foreclosures); however, rents have risen more (4.7%),” Kolko notes. “This means that prices are lower relative to rents than they were a year ago.”

“But more importantly, mortgage rates have fallen,” he adds.

To calculate whether renting or buying costs less, Trulia assumes people can get a low mortgage rate of 3.5%, itemize their federal tax deductions, are in the 25% tax bracket, and will stay in their home for seven years.

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